The Battle for Offsets: In the Mind of EJAC

January 24, 2017 by Harry Horner

Katie Headshot

In the wake of the proposed Scoping Plan, CC.info spoke to Katie Valenzuela Garcia, a prominent member of California’s Environmental Justice Advisory Committee (EJAC), and as such, one of the lead campaigners against offset use in California. This interview ranges over the motivations for their opposition to offsets, to their recommendation for Cap-and-Tax in the new Scoping Plan, and to how EJAC wants to frame the ongoing debate.


CC.info -HH: One of EJAC’s primary aims is the air quality and health implications of local emissions. Is there a case that targeting wildfires, and taking old ‘clunker’ trucks of the road, might produce more air quality benefits than halving the offset limit for example?

Sure, we ought to see a further 4% of on-site emission reductions, but there is understood to be a questionable and imperfect correlation, even possibly inverse, between local onsite GHG reductions and local particulate emissions. Is targeting the offsets industry really the most effective way of achieving health benefits for EJ communities?

Katie Valenzuela Garcia: To be clear, we are not just focusing on offsets. We give recommendations on a range of matters; in our opinion, what California has done to date is not close to adequate to what we will need to do to meet our 2030 and 2050 targets.

We can’t ignore one aspect in favour of another, and yet we need to implement more than we ever have done before, and consider new things if we are going to meet those targets. So it requires transitioning diesel trucks to cleaner fuels as much as it does eliminating offsets. It requires both investing in extra transportation and waste infrastructure, making sure we end our reliance on diesel water pumps in the central valley, and getting old diesel school buses off the roads. So we are targeting those measures as well as, not instead of, eliminating offsets.

Offsets are disproportionately used by large emitters who very often have their facilities at the heart of disadvantaged communities. So it is not just the theoretical issue we have with offsets, it is the factual issue of where the offsets are being used, what the effect is on our communities. The correlation between contaminates and particulate matter is not one to one, but it is there. And then there are the activities that relate to these facilities: the trucks driving in and out, the jobs and exposure of workers to high pressure gases, all of the things that result from these GHG emissions activities. We can’t and don’t examine the issue in the vacuum of carbon emissions, we look at the holistic picture.


HH: I do understand that. The offsets industry has actually made the same point. They have argued that you can’t prioritise any one of the stipulations in AB197 and AB32, more than another. Cost effectiveness is equally as necessary as helping disadvantaged communities, or achieving a certainty of outcome in emissions; each must be fulfilled under law.

One of the explicit aims of the legislation is that of climate leadership, and helping other States to a cleaner future. I believe that offsets present one of the most obvious ways for California to fulfill this leadership clause, there are climate stakeholders emerging all over North America on the back of the offsets industry.

It’s the same idea with cost-effectiveness. At their current 15-20% price discount to allowances, offsets provide a clear cost-containment mechanism. As one of the explicit requirements in legislation, surely this too is important?

KVG: I wouldn’t say that we have demonstrated climate leadership. We won’t have done so until we can demonstrate that we can reduce emissions and materialise co-benefits to communities around California.

That is the big problem with the offsets program. We self-proclaim ourselves as climate leaders when the numbers for the Cap-and-Trade program show we are not. In fact, our emissions did not go down as much as they might have done and that in many cases is because we allow use of these offsets to continue.

Now I know a whole industry has sprung up around offsets, and that is not something I support either. In other countries where these offsets are being used, REDD+ as a key example, it’s logging contractors that come and are using offsets to restrict the rights of aboriginal/native people on their own land. Indeed, in some cases, these external forces do physical harm to native people and destroy the longevity of the communities’ food and transportation supplies. We can’t shade everything in the same colour of green.

There are some things which are happening as a result of this program which are not ideal from an environmental, social and even rational justice, point of view. We’ve created an industry that trumps local concerns in California, and why we are not climate leaders yet. We have to sort our own house, before we have a right to lead anyone outside of California on these issues.


HH: Well REDD+ is not yet part of the California program and will not be in this regulatory cycle. Moreover, the EJ side of the debate is being examined by ARB in minute detail, and the Acre project in Brazil in particular has been proclaimed as a model for forestry offsets and tribal consensus work. You also regularly hear from tribal communities that have benefitted from green revenues derived from the WCI offset program…

KVG: It’s not green, it’s a matter of grey-green. There are many tribal leaders in those communities who are also working with Environmental Justice groups, who don’t agree, and will feel very strongly against this. We had someone fly to one of hearing from Nigeria simply to say “please don’t allow this to continue or expand, this is harmful to my people”. So just as loudly as you hear people say this is great, you hear many other voices who are saying no it isn’t. And they are organizing against it within their communities, just as we are organizing against it in California.


HH: Can we agree on one thing then, that given that we have such strong voices from both sides, that the result of the discussion must be driven by quantitative research and grounded information, rather than mere lobbying on both sides?

KVG: I don’t weigh the voices of industry and impact communities the same, I think that’s one of the principles of EJ. We keep seeing this with ARB: you hear strong voices from industry, because they make money from this and so can pay to fly tribal leaders up from Brazil to say ‘please do this for me’. So the answer is “No”, I value the voices of impacted communities first and foremost, and those voices have been strong and consistently against the offsets program in addition to other policies like cap and trade that ARB continues to promote.


HH: One of the key problems that the offsets community has expounded is that the debate is being driven by qualitative rhetoric and even misinformation, rather than drilling down and informing decision makers with required data. Does EJAC not support this approach?

KVG: Of course, although from the data that we have, ARB has intentionally made it difficult to track facilities through the various reporting and management tools. That’s why the California Environmental Justice Alliance report was so pivotal, it was the first time we were able to link facilities through the process, and demonstrate that offsets were more used by large facilities in EJ communities.


HH: We could have told you that. We have that offset data and we have it localized. Moreover, it makes practical sense that offsets are more than proportionately used by large entities, they are able to deal with the administrative cost and risk burden still associated with offsets in compliance.

KVG: Well I wish you had told us! Since last December I have been telling ARB that the facility numbers don’t match, and how this causes problems for EJ analysis.


HH: I remember you saying this last time we spoke. we could bring up that interview and it would be the exact same. Do you think is through a negligence on ARB’s side?

KVG: Yes of course it is negligence. I don’t know if its willful, I won’t answer on behalf of their intent, but I do know that I told them explicitly a year ago that that was a problem, and a year later it is still a problem.

What we know about Cap-and Trade is that emissions have gone up. They are going up more quickly in EJ communities than they are anywhere else. That is one data point that we know. If you circle the whole state of California on the adaptive management tool, you see emissions go up. ARB’s PATHWAYS model does not account for Cap-and-Trade, their modelling in the Scoping Plan only includes the prescriptive measures they know they can model. They literally just fill Cap-and-Trade to meet any gap in emissions, and say that the market can take all of the slack.


HH: Sorry, but I have to challenge that. firstly, the PATHWAYS model feeds into the REMI model which does have carbon price as an input, and secondly, we have seen emissions from covered sectors in California decrease year-on-year – we would be happy to share this data with you. The confusion may have arisen because without reductions seen in the imported electricity sector, i.e. out-of-state reductions, the emissions have not fallen in the same way.

If anything Cap-and-Trade guarantee an emission reduction outcome – once the market is tight, it is the carbon tax methodology that gives a variable outcome in theory.

KVG: The issue arises because they didn’t appreciate you could have a functional equivalent tax accompanied by a guaranteed falling cap, as you have in the Scoping Plan’s new Cap-and-Tax scenario. That is why this fourth scenario was recommended to staff.

On the emissions front, when you look at gross emission reductions, we have not seen decreases. Google it, across the state those emissions have gone up. CARB says that’s because the economy is recovering and other such excuses.

HH: Well we have recognized a net fall. Admittedly some sectors have increased, but the whole point of Cap-and-Trade is to find the lowest cost reductions possible. Some industries may go up, but that not a problem, the mechanism finds the lowest cost emission reductions within the whole cap.


HH: Offsets have created benefits for rural disadvantaged communities with tragic environmental justice issues going back hundreds of years. Do you think there is an urban bias in EJAC towards low-income urban communities as opposed to their compatriots in rural locations?

KVG: No, not at all. In fact, the EJAC includes committee members from several rural locales, we have also conducted several workshops in those communities on tribal lands in the North of the State. Those workshops actually delivered similar themes and issues for concern as the urban equivalents.

I heard concerns over access to revenues for building sustainable economic projects, concerns over transportation and food infrastructure, and about the global nature of the programs they were seeing. They too understood how the continued pollution of cap-and-trade regulated facilities was detrimental to them and the rest of tribal communities – as much as it was to those that lived next to those facilities in urban locations.

So no in answer, I don’t believe that we are out of line with the concerns of rural and tribal communities at all.


BH: You made some strong points on forestry offsets. Coming back to Harry’s emphasis on cost-containment: Would you argue that the current carbon price, and its schedule, is therefore too low?

KVG: Yes, we are advocating for a higher price of carbon that reflects the social cost, and so under the Cap-and-Tax scenario we would recommend a much higher carbon price.


HH: There isn’t a consensus that the British Columbia carbon tax has led to decreasing emissions. Do you have any evident of a Cap-and-Tax system functioning successfully?

KVG: At this point it is pretty ideological, because there are not a lot of examples that have got past the drawing board, I want ARB to try and figure this out. They have an almost dogmatic leaning to Cap-and-Trade to the point where they are literally citing random blogs to say why certain things may or may not work.

I want us to figure this out, and this is not going to happen whilst we blindly assume Cap-and-Trade is the best way forward – I’m certainly not convinced it is.

There are smart people in that building that can figure this out, and they’re not even trying. That’s my big problem, I am not ARB, an economist, or environmental science expert. I am an EJ person, I work in these communities and I am telling you what I’m seeing. It cannot be the best, we want and can expect them to do better.


HH: Are there any economists known to EJ that would recommend Cap-and-Tax. As an economist by training, I struggle to not see it as a contradiction in terms.

KVG: We have partners at Californian universities that do believe it can work.


BH: Thanks for your time Katie, finally, are there any other concerns you would like to convey?

KVG: Being able to trade across entities, means that not all entities need to make the same levels of emission reductions as each other. Therefore, I think we are trying to tweak something that is inherently broken. EJ communities want us to have a conversation about we could do from a clean slate, what would it look like, and whether it would be more equitable in achieving climate goals.

Industry has built up revenue expectations and jobs and around the current system, so of course they are threatened by this conversation. Eventually these industries will have to go, and eventually there will be no more oil and refineries, so why not see the shared benefit of making the shift early is my question to these folks?


Harry Horner – (harry@californiacarbon.info)

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